Activation Can Damage Reservists' Finances/ February 24th, 2003
Most reservists earn more from their civilian jobs than they do from the military. For example, one U.S. Navy reservist has a salary "in the $50s" at his AT&T job, but only earns $21,000 to serve his country ($29,600 after adding in hazardous duty pay and cost of living adjustments). One benefit: His income will be tax-free during a hostile situation, according to Bankrate.com. Congress recognized in 1940 that when reservists are called to action their finances suffer, so it passed the Soldiers and Sailors Civil Relief Act. Some protections the law provides:
- Prevents evictions, when the rented housing costs less than $1,200 per month;
- Caps interest rates on pre-existing loans--including mortgages, credit cards, and personal loans--at 6%; and
- Prohibits default judgments for failure to appear in court in lawsuits and trials.
- Develop a financial plan; make sure you have several month's savings set aside and create a budget for your new level of income;
- Ask a trusted family member to pay your bills and leave him or her enough money to do so;
- Notify your creditors that you may miss payments and talk with them about the 6% cap allowed in the Soldiers and Sailors Act; and
- Take advantage of and become familiar with military-provided help--legal and financial counseling.